Question : Match the following with respect to journal entries for treatment of goodwill :
i.
The incoming partner brings his share of goodwill,
A.
No entry
ii.
The incoming partner does not bring his share of the goodwill
B.
Premium for goodwill A/c. Dr.
Incoming Partner’s Capital A/c. Dr.
To Sacrificing Partners Capital A/c.
iii.
Incoming partner pays his share of goodwill privately
C
iv.
Incoming partner brings only a part of his share of goodwill
D.
New Incoming Partner’s Capital A/c. Dr. To Sacrificing Partners Capital A/c.
Option 1: i- B, ii-C, iii-A, iv-D
Option 2: i- C, ii-D, iii-A, iv-B
Option 3: i- D, ii-C, iii-A, iv-B
Option 4: i- D, ii-C, iii-B, iv-A
Correct Answer: i- C, ii-D, iii-A, iv-B
Solution : Answer = i- C, ii-D, iii-A, iv-B
i. When the incoming partner brings his share of goodwill, the journal entry includes debiting Premium for Goodwill Account and crediting Sacrificing Partners' Capital Account.
ii. For the incoming partner who does not bring his share of goodwill, the journal entry is to credit the New Partner's Capital Account and debit the Sacrificing Partner's Capital Account.
iii. When the incoming partner pays his share of goodwill privately, there is no journal entry as it does not involve the firm's accounts.
iv. If the incoming partner brings only a part of his share of goodwill, the journal entry is: Premium for goodwill A/c. Dr Incoming Partner’s Capital A/c. Dr. To Sacrificing Partners Capital A/c Hence, the correct option is 2.
Question : Match the following :
Sacrificing Ratio
Nominal Account
Gaining Ratio
Reconstitution of Partnership
Revaluation Account
New Ratio - Old Ratio
Iv
Admission of a Partner
Old Ratio - New Ratio
Option 2: i- D, ii-B, iii-A, iv-C
Question : E and F were partners in a firm sharing profits in the ratio of 3: 1. They admitted G as a new partner on 1-3-2017 for 1/3rd share. It was decided that E, F and G will share future profits equally. G brought Rs.50,000 in cash and machinery worth Rs.70,000 for his share of profit as premium for goodwill. Which journal entries will be passed for accounting for Goodwill .
Option 1:
Cash A/c
Dr.
50,000
Machinery A/c
70,000
To Premium for Goodwill A/c
1,20,000
(Cash and Machinery contributed by G on his admission, as his share of goodwill premium)
Premium for Goodwill A/c
F’s Capital A/c
30,000
To E’s Capital A/c
1,50,000
(Premium for goodwill brought in by G Credited to E along with 1/12 of the goodwill to be contributed by F due to gain in his profit sharing ratio)
Option 2:
Date
Particulars
L.F.
Dr. (Rs.)
Cr. (Rs.)
2017
March 1
.
Option 3:
To F’s Capital A/c
90,000
Option 4: None of the above
Question : Net Profit Ratio of X Ltd. of 5 years for years ended 31st March,
Year
2016
2018
2019
2020
Net Profit Ratio
15%
14%
13%
12%
10
Above table shows Net Profit Ratio is declining over a period of last 5 years, is example of-----------
Option 1: Time Series Analysis
Option 2: Trend Analysis
Option 3: Both 1 and 2
Question : Net Profit Ratio of X Ltd. with that of Y Ltd., Z Ltd. and industry standards for the year 2019-20:
XLtd.
YLtd.
ZLtd.
Industry
10%
11%
Above table indicates that Net Profit Ratio of X Ltd. is less than that of Y Ltd., Z Ltd. are the example of _________.
Option 3: Cross-sectional Analysis
Question : Read the following information carefully and answer the question
Revenue from Operations
8,75,000
Creditors
Bills Receivable
48,000
Bills Payable
52,000
Purchases
4,20,000
Trade Debtors
59,000
Option 1: 29.6 times
Option 2: 2.96 times
Option 3: 29.6%
Option 4: 2.69:1
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